DISCUSSION OF THE RECENT RULING OF THE SOUTH AFRICAN SUPREME COURT OF APPEAL IN AFRIBUSINESS NPC V MINISTER OF FINANCE

Peter Volmink, Allison Anthony

Abstract


The recent ruling by the South African Supreme Court of Appeal (SCA) in Afribusiness NPC v Minister of Finance raises questions about the lawfulness and fairness of the use of prequalification criteria in public procurement. In this case note we argue that the legality of regulation 4 of the Preferential Procurement Policy Framework Act of 2000 (PPPFA) and the principle of using prequalification criteria in public procurement are discrete issues. The SCA’s finding on the legality issue – that regulation 4 is ultra vires the PPPFA – is unsurprising. Indeed, it is difficult to reconcile the use of prequalification criteria for “designated groups” as set out in reg 4 with the preference-point system prescribed by the PPPFA. However, we question the correctness of the court’s view that prequalification criteria do not satisfy the objectives of section 217(1) of the Constitution, such as fairness, transparency etc. In our view, there is nothing constitutionally suspect about the use of prequalification criteria as a tool to promote socio-economic objectives, provided they are designed and implemented within the discipline required by the Constitution. Properly-designed prequalification criteria serve as important tools for the protection and advancement of persons disadvantaged by unfair discrimination, as envisaged in section 217(2)(b). Furthermore, we recommend that the drafters of the regulations take the opportunity created by the SCA’s ruling to revise the regulations as a whole. In our view, the problems with the regulations are not confined to the impugned regulations 3(b), 4 and 9, but extend to other regulations as well – most notably, regulations 5 and 6 dealing with the preference point system and regulation 8 dealing with local content and production. We argue that these regulations do not award preference points for “specific goals” in the manner contemplated by the PPPFA, and are thus susceptible to challenge. Ultimately, the problems with the regulations are traceable to design defects in the PPPFA itself. The PPPFA cannot be “fixed”. It has run its course and must be replaced with a new legislative framework as a matter of urgency.

Keywords


Preferential Procurement Regulations

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References


Literature

Bolton, P. 2007. The Law of Government Procurement in South Africa. Durban: Lexis Nexis.

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Media statement issued by Department of Trade Industry and Competition dated 4 November 2020 “The Supreme Court of Appeal Ruling on the Validity of the PPPFA Regulations of 2017 Has No Effect on the B-BBEE Act and its Requirements”, last accessed from http://www.thedtic.gov.za on 13 November 2020.

Case Law

Afribusiness NPC v Minister of Finance [2020] ZASCA 140 (2 November 2020)

Airports Company South Africa v Imperial Group Ltd 2020 (4) SA 17 (SCA)

AllPay Consolidated Investment Holdings v Chief Executive Officer, South African Social Security Agency 2014 (4) SA 179 (CC)

Brummer v Minister for Social Development 2009 (6) SA 323 (CC)

Continental Power Supplies (Pty) Ltd v Minister of Trade and Industry case no 89256/2018 (ZAGPPHC)(20 July 2020)

CTP Ltd v The Director-General Department of Basic Education [2018] ZASCA 156 (20 November 2018)

Economic Freedom Fighters v Minister of Justice and Correctional Services 2021 (2) BCLR 118 (CC)

Executive Council Western Cape v Minister of Provincial Affairs 2000 (1) SA 661 (CC)

First National Bank of South Africa Ltd v Land and Agricultural Bank of South Africa; Sheard v Land and Agricultural Bank of South Africa 2000 (3) SA 626 (CC)

Minister of Finance v Van Heerden 2004 (11) BCLR 1125 (CC)

Minister of Justice and Constitutional Development v South African Restructuring and Insolvency Practitioners Association 2018 (5) SA 349 (CC)

National Coalition of Gay and Lesbian Equality v Minister of Home Affairs 1999 (3) SA 173 (CC)

Powertech Transformers (Pty) Ltd v City of Tshwane Metropolitan Municipality and Others [2018] ZAGPPHC 772 (20 March 2018)

Rainbow Civils CC v Minister of Transport and Public Works, Western Cape [2013] ZAWCHC 3 (6 February 2013)

Sizabonke Civils CC t/a Pilcon Projects v Zululand District Municipality 2011 (4) SA 406 (KZP)

S v Steyn 2001 (1) SA 1146 (CC)

South African Police Service v Solidarity obo Barnard 2014 (10) BCLR 1195 (CC)

Legislation

Broad-Based Black Economic Empowerment Act 53 of 2003

B-BBEE Regulations, 2016

B-BBEE Generic Codes of Good Practice, 2013

Preferential Procurement Policy Framework Act 5 of 2000

Preferential Procurement Regulations, 2001

Preferential Procurement Regulations, 2017

Policies

The National Industrial Participation Revised Guidelines, 2013, last accessed on http://www.thedtic.gov.za/wp-content/uploads/Nip_Guidelines2013.pdf on 4 December 2020.




DOI: https://doi.org/10.14803/8-1-35

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